Elon Musk probably said it best when the Tesla (TSLA) CEO declared, “the supply chain stuff is really tricky.”
Oh, you’d better believe it.
The supply chain—the network of people, organizations, and information that moves a product or service from its origin to the final customer—is crucial to the world’s economy, as it ensures efficiency and lowers costs.
The COVID-19 pandemic exposed just how fragile global supply chains are.
“For decades, we have grown accustomed to ever quicker deliveries with increasing methods of tracking,” said David Dreyfus, Rutgers Business School supply chain management professor. “Two-day deliveries, free returns, and omni-channel retailing have become the norm.”
So, he asked, what happened during this pandemic that caused our supply chains to play out of tune?
“You may remember that we ran short of ventilators, personal protection equipment, toilet paper, and computer chips,” Dreyfus wrote in a chapter of Reflections on the Pandemic: Covid and Social Crises in the Year Everything Changed.
“Instead of an isolated disruption, as is usually the case amid a natural disaster or war, this pandemic occurred almost simultaneously around the world.”
Dreyfus said the pandemic revealed the level of globalization and complexity of our modern supply chains—as well as the fragility.
“When any part of this chain breaks, disruptions are likely to follow,” he said. “War and inflation offer new disruptions. Better and more robust supply chain management principles should be adopted.”
Semiconductor industry executives are concerned about the global supply chain.
“Ultimately, our quest to manage the risk within businesses continues,” Dreyfus said.
The world’s economy has largely recovered from the pandemic, but supply chain concerns still linger.
More on the tech industry:
The semiconductor industry’s revenue is projected to hit record highs in 2025, with the Semiconductor Industry Association (SIA) and the World Semiconductor Trade Statistics (WSTS) calling for global chip sales to hit $700.9 billion.
This is one giant step toward the industry’s goal of $1 trillion in annual chip sales by 2030, and it is being driven primarily by booming demand for AI chips, data centers, automotive electronics, and consumer electronics.
However, industry executives are concerned about supply chain stability, energy security, and talent shortages, according to the 21st annual Global Semiconductor Outlook by KPMG LLP and the Global Semiconductor Alliance (GSA).
Fueled by the AI boom, 93% of industry leaders expect revenue growth in 2026, but the bullish outlook is tempered by significant operational and geopolitical risks.
For the first time, KPMG stated that leaders now rank tariffs and trade policy as their top concern, and some fear they may not be able to procure sufficient energy to power their advanced chip manufacturing facilities.
“We’re seeing a fundamental surge in semiconductor demand that spans the entire economy—from AI and data centers to electric vehicles,” Chad Seiler, Line of Business Leader, Technology, Media and Telecom at KPMG US, said in a statement.
“This broad-based demand creates a more resilient growth trajectory, but it also creates intense pressure.”
The survey is based upon the opinions of 151 executives, over half of whom are from companies with more than $1 billion in annual revenue.
“Leaders are now faced with the challenge of capitalizing on this historic opportunity while simultaneously navigating supply chain, energy and talent challenges,” Seiler added.
President Donald Trump’s tariff regimen also seriously rattled the world’s supply chains.
The chip sector had to contend with increased costs and supply chain reconfigurations, which created uncertainty and led to higher prices for tech products as companies tried to avoid tariffs by investing in new locations or redesigning products to use local components.
While fabless and IP companies like Nvidia (NVDA) and Broadcom (AVGO) are thriving, Infosys said that integrated device manufacturers and equipment suppliers may face contraction due to supply chain disruptions and cost pressures.
Geopolitical tensions are disrupting global supply chains, introducing trade barriers, export controls, and shifting production priorities, which in turn create uncertain and rising costs, according to the digital consulting and services firm.
Related: RTO mandates to AI agents: How work is changing in 2026 and beyond
“Upstream challenges, such as shortages of neon gas and rare earth metals, are worsened by geopolitical risks—from the war in Ukraine to China’s export restrictions,” Infosys said.
“Additionally, delays in new fab construction, such as TSMC’s Arizona facility that is now rescheduled for 2028, have intensified supply concerns.”
The firm said companies with a robust talent pipeline and resilient supply chains “will be best positioned to navigate these complexities and drive long-term success through 2030.”
“Companies are diversifying supply chains, forming strategic partnerships, and leveraging AI-driven forecasting,” Infosys said.
“At the same time, the focus on domestic semiconductor production is increasing. While this shift offers opportunities for resilience and innovation, it also introduces risks of fragmentation and geopolitical tensions.”
AI can be used across the entire supply chain, according to Haslam College of Businesses’ Global Supply Chain Institute.
“Transportation and logistics companies use AI technology and predictive analytics to help with route planning to enhance productivity and decrease costs,” the institute said on its website.
“By analyzing factors like traffic, weather, and transportation networks, AI helps companies find the fastest routes, saving time and money. AI can also maximize cargo space to ensure trucks are loaded as efficiently as possible to save on fuel.”
Related: AI growth strains electrical grid as tech companies expand operations
This story was originally published by TheStreet on Dec 26, 2025, where it first appeared in the Technology section. Add TheStreet as a Preferred Source by clicking here.
